Viability Evaluation of a Prospective Venture: Financial Management Interim Assignment

Student Number: 1552665
Master of Business Administration
CRKC7003 Financial Management
Interim Assignment
Unit 3
1

EXECUTIVE SUMMARY
In this particular assignment, evaluation of a prospective venture has to be made and a report
is made to evaluate the viability of a prospective venture. So in order to evaluate the viability of
the venture projected Profit & Loss Account has been made based on certain estimates. These
accounting estimates and assumption has been taken based on market survey as referred in the
case study keeping in mind the assumptions that generally operate in an efficient market. Cash
Budgets and Analysis of the cash flows will reflect the key takeaway with respect to the viability
of the venture.
2

Contents
Introduction...............................................................................................................................................3
Projected statement of profit and loss for the first year of operations..................................................4
Monthly Projected Income Statement....................................................................................................5
Analysis of profit & loss statement for the 1st year of operations.........................................................9
Assumptions & Estimates.......................................................................................................................9
Projected Cash Budget............................................................................................................................10
Cash Flow and Financial Analysis......................................................................................................11
Assumptions & Estimates.....................................................................................................................11
Analysis of the Assumptions and Estimates.........................................................................................12
Critical Appreciation of the Venture of Aunt Chiara...........................................................................13
References:...............................................................................................................................................14
3

Introduction
The purpose of the Interim Assignment is to develop a Profit and Loss Statement for the first
year of operations of an opportunity, with clear explanation of any assumptions made in the P &
L Statement.
Details for ease as per below;
Total amount of capital available in hand = € 450,000
Price per pound of nuts in retail in USA = $27.50
Discount offered to Chiara = 40%
Information relating to expenses:
Cost Per unit
Price per pound of nuts Retail Price – Discount = $27.50 – 40% $16.50 per pound
Freight $2.70 per pound
Local Packing and Shipping $3.00 per pound
Credit Card Charges 1.50% on total sales
through credit card
Salaries $11,500 per annum
Salary to additional assistant $300 per month x 12 months $3,600 per annum
Decorative Box 0.80 per 600 grams
pack
Market Survey Expenditure € 5,000
Capital Expenditure:
Refrigerator = €4750
Website = €8000
4